Big-name funds pile into real estate debt as banks retreat
By Iain Withers
LONDON, May 14 (Reuters) -Some of the world's largest investors are making deeper inroads into lending to commercial property, as they snap up market share from retreating banks and bet on an end to the sharp drops in real estate prices.
U.S. fund firms PGIM, LaSalle and Nuveen, Canada's Brookfield BN.TO and QuadReal, Britain's M&G MNG.L, Schroders SDR.L and Aviva AV.L, and France's AXA AXAF.PA all told Reuters they plan to increase their credit exposure to property.
Most are focusing on lending to logistics, data centres, multi-family rentals and the high-end office market. The office sector more broadly continues to struggle, deterring funds.
"If I look at our strongest bet currently, it's probably real estate debt," said Isabelle Scemama, who heads up AXA's 183 billion euro ($198 billion) alternative investments arm.
LaSalle Investment Management, which manages $89 billion globally, said it was targeting growing its real estate debt investments by 40% to around $7.6 billion over two years, including in distribution, hospitality and student housing.
Betting on real estate debt is not for the faint-hearted. The global commercial property industry, in particular offices, is still in the grip of its biggest slump since the 2007-9 financial crisis.
But alternative lenders believe the worst may have passed and they can generate attractive returns as valuations recover.
"Historically through real estate cycles, you would find that generally loans made at the bottom of the cycle... tend to have the lowest delinquency rates and the highest spreads," said Jack Gay, global head of debt at Nuveen.
PRISED OPEN
Stricter capital rules for banks - including new international standards dubbed the 'Basel Endgame' - and U.S. regional bank failures have opened the market further, fund firms said.
"The challenges faced by the banks have really led to a decrease in direct (loan) originations for commercial real estate," said Nailah Flake, managing partner in Brookfield's Real Estate Group, which sees opportunities to lend more.
Private equity firms are also weighing in. Apollo Global Management launched its first dedicated European real estate debt fund targeting 1 billion euros this year, a source familiar with the matter said.
The fund management arms of major banks are also targeting the market. Goldman Sachs Asset Management said on Monday it had closed its largest real estate credit fund to date, with over $7 billion of lending capacity, including some of the firm's own capital and leverage.
In Britain, non-bank lenders accounted for 41% of real estate loans in 2023, more than doubling from 19% just nine years earlier, according to Bayes Business School data, which also showed that new commercial property lending in Britain reached a decade-low.
Across continental Europe, the proportion has also steadily grown to 20-30%, Bayes said.
The growing role of investment funds in lending - known as 'shadow banking' - is worrying regulators because of default and contagion risks. Reporting requirements for private funds are also softer than for banks, meaning less transparency.
European Central Bank Vice-President Luis de Guindos said in March that the exposure of non-banks to commercial real estate was one of the main risks to financial stability in the region.
"I do find it quite worrying that (invested) pension money is affected and funds can do whatever they want and it goes under the radar," said Bayes senior research fellow Nicole Lux.
($1 = 0.9256 euros)
Reporting by Iain Withers in London, Additional reporting by Matt Tracy in New York
Editing by Tommy Reggiori Wilkes and Susan Fenton
Ativos relacionados
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.
